The demand for qualified software developers is growing faster than ever. Just in the United States, there are over 223,000 open positions, of which 90% are outside Silicon Valley. Monster Job Board indicates that the staff shortage might be much greater than many would expect. According to their most recent survey of employers, the shortage of qualified programmers today might be at its worst since 2008.
But the tech talent gap is larger than any individual role. There is an overall shortage of people who know how to code, whether they’re writing mobile app backends or developing cloud-computing platforms. Finding a dedicated developer with the skills and experience you need at a reasonable price is very difficult today. More and more US companies are using IT staff augmentation services and hiring offshore dedicated developers teams in different parts of the world.
What is IT Staff Augmentation?
IT staff augmentation is the employment of external IT staff on a temporary basis to enhance the information and technological capabilities of an organization. In the context of IT staffing, projects and firms will be staffed with developers and other IT workers as required. (Wikipedia)
Staff augmentation starts by evaluating the existing staff and then deciding what skills are needed to accomplish business objectives.
Using these techniques allows companies to:
IT Staff Augmentation Market Overview
SIA estimates that staffing was a $490 billion industry in 2018, mostly made up of outsourcing talent on a temporary basis. If we look at the staffing market globally, 42% ($185 billion) is in the area of temporary staff. The largest segment is the outsourcing of qualified talent in the IT sector ($69 billion), which accounts for 37% of the world's total workforce.
In fact, IT staffing is more than two times larger than the next professional human resources segment, engineering, at $32 billion. However, these proportions differ by geographic region. For example, IT outsourcing has achieved the highest market penetration in the Americas, where it accounts for 41% of professional staff, compared to 35% in the Asia Pacific (APAC) region and 33% in Europe, the Middle East and Africa (EMEA).
Small businesses usually turn to outsourcing models when it comes to accounting and IT because those tasks require proficiency and skills that they might not possess internally.
[ Source: StaffingIndustry.com]
Why companies outsource
In 2018 the global consulting company Deloitte published the Global Outsourcing Review. According to the research, traditional outsourcing limited to back-office operations has become outdated. New outsourcing strategies focusing on all aspects of business are becoming more and more prominent.
Large companies across all industries leverage the transformative potential of outsourcing and implement robotic process automation (RPA) to:
[Source: Deloitte "Global Outsourcing Review]
At the same time, staff outsourcing increases the efficiency of small businesses by allowing internal employees to focus on projects that match their skills.
According to research conducted by global marketplace Clutch.co in 2019, small businesses choose outsourcing for the following reasons:
IT staff outsourcing by offshore location popularity
Companies doing business globally need access to expert IT support. That’s why many businesses operating in global markets find IT experts internationally. Today there are 3 main geographical areas in outsourcing: Eastern Europe, Asia, and Latin America.
70% of buyers plan to increase their use of outsourcing, with 35% planning to significantly.” — National Outsourcing Association
One of the key indexes to evaluate the attractiveness and maturity of the IT industry in these regions is by the development of their IT ecosystems. This metric includes training of highly qualified staff in higher education institutions, start-ups and a favorable investment climate, government support, professional meetings and popular scientific conferences.
IT ecosystem by region on a scale of 1 to 10
Things to Consider When Looking For an Offshore IT Staffing Vendor
In the previous paragraph, we analyzed the most popular regions to augment/outsource IT staff because of their developed IT ecosystem—Eastern Europe, Latin America, and Asia. However, these regions differ significantly in terms of a variety of other outsourcing indexes like a number of highly skilled developers, average hourly rates, experience, and cultural compatibility.
Comparison of offshore IT staff outsourcing locations
(hourly rates, pull of professional developers, cultural compatibility)
The Bureau of Labor Statistics forecasts employment growth of 26% by 2028 in the USA. Some 284,100 IT jobs are expected to be posted during this period. The growth of the web and software development field affects the growth of work scope and specialists' rates. This means that competition for talent among employers continues to grow and leads to the search for alternative ways of staff augmentation like the hiring of remote developers.
In this guide, we will analyze back-end developers based on their experience for major outsourcing destinations. We are using the job title of back-end developer, as this position unifies our company’s services and statistical data on Glassdoor, Stack Overflow, and Payscale. Usually, our engineers are capable of executing the entire process of building an end-to-end web experience, but we found a full-stack developer title too difficult to quantify in the IT community.
This list shows the average annual back-end developer salary for popular IT outsourcing regions. The lowest rates are in Asia (India and the Philippines), where the rate for back-end developers starts from $10 per hour. The rates are significantly higher in East Asia (China) and Hungary at about $25/hour. The average back-end developer rate in Eastern Europe and Latin America is about $20/hour, except Belarus and Brazil with the lowest rates in their regions.
The price is an important indicator in choosing staff augmentation service providers. However, companies should also pay attention to the pool of professional developers and cultural compatibility.
Cultural compatibility of U.S. and the main outsourced regions
Despite the effects of globalization, intercultural communication is still accompanied by cultural and language barriers. When choosing a vendor, you should pay attention to how their vision of business processes is similar to yours and how quickly your team can work well together with theirs.
Hofstede Insights provides a tool to analyze the cultural identity of different countries.
These criteria were used for the analysis:
- Power distance is the willingness of cultural members to accept the authority difference of each other.
- Individualism is the degree of interdependence a society maintains among its members.
- Masculinity shows the extent to which culture is oriented towards success. A high number indicates that it is important for people to achieve results, to win. Low—the process is important; enjoying what you do.
- Uncertainty avoidance refers to human attitudes towards future uncertainty. High—Uncertainty is a danger that is being avoided. Low—Uncertainty is the way to get new opportunities.
- Long term orientation is a pragmatism degree with regard to future plans.
- Indulgence is defined as the extent to which people try to control their desires and impulses, based on the way they were raised.
[Source: Hofstege research]
Eastern European companies provide highly qualified developers who strive for innovative solutions and open discussion. This is primarily due to the high level of information technology education and quality language training. Due to its favorable geographical location, time zone differences have practically no impact on team management and communication, so services can be provided on a permanent basis.
[Source: Hofstage research]
The Asian locations are popular as well as the Eastern European ones. However, there are some limitations due to time differences, communication and cultural differences between these countries. This is well compensated by a large number of available developers and low rates
[Source: Hofstage research]
Latin America is a relatively new direction in staff outsourcing. For a U.S. company, this destination is convenient for its geographical closeness and similarity in time zones. But cultural differentiation, poor technical training, and non-configured business processes can slow down an IT project and lead to budget overspending.
I would like to note that the graphs show the general cultural orientation of the countries. However, due to outsourcing development, there is a certain correlation between the removal of cultural barriers and work in the IT field. The companies involved in IT staff augmentation services show loyalty and adoption to cultural and language traditions for countries they've been working with for a long time. The more working experience with foreign outsourcing partners a vendor has, the more likely the vendor's talents will quickly adapt to the client's in-house team.
Staff Augmentation Company Soft Skills to Pay Attention to
After analyzing popular outsourcing locations and choosing a country where you might hire developers, it is worth researching IT staff augmentation service providers. You can start by checking the company’s reputation.
There are a sufficient number of proven platforms/marketplaces providing the necessary information about vendors like customers’ feedback, legal information, comparison data. For example, Clutch.co, Google Reviews, Good Firms, and CreditSafe. When contacting a potential vendor, it would be a good idea to ask for references so as to find someone to communicate with and answer questions.
The IT staff augmentation service provider you choose is the company you will contact to deal with hired developers and to cooperate with regarding financial and organizational issues. Therefore, the decision to work together should be based on how effectively the vendor will respond to client requests, and how quickly and professionally the vendor solves business conflicts.
Before continuing negotiations on working together, it is worth wondering how they solve workflow difficulties, what practices they use, and whether they have had to deal with the kinds of issues that affect you. It is not always possible for a developer to fit into your in-house team and deliver expected results. Check out how the company deals with this issue and how quickly it can resolve it.
Capacity to scale team
One of the main reasons for choosing staff augmentation services is the urgent need to build up the team's capacity to start/end the project. Although there are outsourcing regions with an extensive pool of talents, it can sometimes be difficult and take several months to bring on board a developer who knows a certain technology. Check how quickly the vendor can respond to your requests for additional developers. You should consider the size of the potential vendor and its recruitment capabilities.
Developers, in many cases, are introverts. They are technical people to the core, so it is oftentimes difficult for them to participate in discussions and formal communication. This is further complicated when there is also a language barrier.
Statistically, programmers in Eastern Europe have quite a high level of English language knowledge. Therefore there is practically no language barrier unless the project requires particularly deep knowledge. Ask the vendor, if possible, whether the developers are taking language courses and can they share training results (which could be certificates or test results).
Developed a working environment
The productivity of hired developers depends directly on the working environment. Make sure the IT staff vendor provides developers with the needed working environment, necessary equipment, space and infrastructure to work effectively on your project. Ask how quickly the vendor can resolve these issues if additional hardware, software, network resources, etc. are needed.
Types of IT staff outsourcing cooperation models
Typically, companies deciding to take advantage of staff augmentation services find three basic models of collaboration with staffing companies. That said, depending on the project, the parties may agree on additional terms and conditions and include them in the contract.
This is a form of talent outsourcing aiming to attract additional intellectual power to an existing team. The in-house and remote teams work in close cooperation with each other. In this way, the client's core team is reinforced with missing skills or experience, and overall interaction ensures efficient work. In this model, the client is fully in charge of product development and team management.
This cooperation model is where the client hires a remote development team to build the project. In comparison with the previous model, where the team is integrated into the in-house team and becomes an addition to it, the dedicated team is a separate entity with already developed technical management and workflow. The dedicated team works full-time only on the client's project and is result-oriented. Recruitment and administrative support of the team is provided by the staffing company. The client always stays in touch with the team to manage it, but focuses more on project implementation and promotion.
Project based model (Outsourced team)
In this staff augmentation model, the client contacts an IT staffing firm, submits a project idea, and sets requirements. The vendor offers customized staffing solutions meeting the client's business goals, and is fully in charge of team building and project implementation from idea to launch.
Finding qualified specialists in web, mobile, and other types of software development is crucial for any technological project. If you have ever dealt with large budget projects with tight deadlines, you understand how important it is to have the right people onboard. Finding a reliable IT staffing provider takes time and effort.
In conclusion, in order to take advantage of IT staff augmentation services and to hire experienced developers it is necessary to take into account a number of factors. Pay attention to the cultural and technical background of the team and the company's business process.
It should be noted that not only the national culture but also an IT staffing company’s business ethics and developers’ work ethics play an important role. Take the time to find an IT staffing agency with the required technical knowledge, reasonable rates, and well-developed communication setup. Additionally, a company that provides staffing services has to have enough capacity to meet your company's growth needs and engage the necessary expertisе as soon as needed.
Benefits of Partnering with Active Bridge
- Our staff isn’t big, but all our developers are middle or senior level with extensive experience in full-stack development.
- Active Bridge is a trusted IT staffing partner awarded and recommended by different industry platforms like Clutch.co, GoodFirms, and DOU.
- Transparency and business ethics. We always guarantee that our developers are assigned to only a single project, meaning you’ll have their full dedication to your team’s goals.
- Our developers have good communication skills, so you won’t meet any language barriers.